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TD Power’s Q4 operational performance was in line with our estimates. While FY13 was a subdued year due to lack of major capex in India, management indicated the worst seems to be behind. Enquiries for domestic projects business are high (as demonstrated by order inflow of Rs 3.4 bn in Q4FY13 vs. Rs 862 mn in 9MFY13). Growth for manufacturing division would be driven by exports (hydro and gas engines) in FY14. Despite manufacturing order book of Rs 2.6 bn in FY13, the management remains extremely confident of repeating its FY12 divisional turnover of ~ Rs 4 bn (Rs 2.9 bn in FY13) due to traction from exports. TDPS reported Q4 revenue of Rs 1.8 bn (down 39% YoY). Despite the decline, EBITDA margin stood at 9% (lower by only 60 bps YoY) due to fruition of various cost control measures taken last year. TDPS reported a PAT of Rs 140 mn (vs. our expectation of Rs 108 mn due to higher other income). Valuation We expect manufacturing revenue to grow at 50% in FY14 with 100 bps margin expansion led by (1) higher contribution from exports and (2) operating leverage. We expect order inflow for projects business to increase in FY14 (Rs 4.3 bn in FY13) largely due to order finalization of 8 -10 domestic projects (worth Rs 30 bn to be finalized in the coming quarters). Maintain HOLD with TP of Rs 247 (12x FY15E EPS). At CMP of Rs 237, TP implies an upside of 4%. The stock trades at 15.1x FY14E EPS of Rs 15.7 and 11.5x FY15E EPS of Rs 20.6. Regards, Kashyap Pujara (ED – Midcaps) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1146 Punit Chokhani (AVP – Midcaps) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1130

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